1999 - a strong turnaround for Optima Batteries

1999 - a strong turnaround for Optima Batteries Operating income rose by 36.9 MSEK from -20.2 to + 16.7 MSEK. Income after financial items rose by 35.9 MSEK from -28,9 to +7.0 MSEK. Net sales, excluding GM, increased by 19.0 % to 324.5 MSEK (272.6). A strong US market, but a high dollar rate restrained other markets. Decisive advances in our technology development. A 5-year distribution and technology development agreement with GNB nd Technologies Inc., USA, was signed in autumn which, from the 2 quarter of 2000, will ensure good long-term growth in volume. After 50 years in the Gylling companies Bertil Gylling will retire as managing th director and head of the group at the annual general meeting on 18 May 2000 and will be succeeded by Bengt Hagander. Bertil Gylling will remain on the board. 1999, a marked turning point for Optima, the break-even point has been passed with future sales volumes assured. Globally speaking, it is estimated that Optima's sales will accelerate during 2000 and achieve a total increase of 25-30%. Sales, excluding GM, increased by 19.0% to 324.5 MSEK (272.6). During 1999 sales increased from 444,000 to 508,000 batteries. Of Optima's various markets the one that has been developed particularly well is the US market, which accounts for slightly more than 60 % of the sales volume. Other markets have been restrained by the high dollar rate. During autumn Optima concluded a 5-year strategic distribution and technology development agreement with GNB Technologies Inc., one of the 3 largest battery manufacturers in the US. GNB will sell a small Optima battery under its own trademark Champion®, with the labelling "Made by Optima Batteries Inc., CO". Through GNB a new market is now opening up in the US for Optima in the retail segment. Optima has opened a local office in Japan. This sends a powerful signal to the vehicle and OEM (original equipment manufacturer) markets concerning the com- pany's desire to have a long-term presence and commitment. Organisation - new management team As of 1st January 2000 Gylling Optima Batteries AB and the sales company Optima Batteries AB merged to form one powerful and cost-effective unit. At the annual general meeting on 18th May a new management team, Bengt Hagander and Pär M Ericson, will be taking over from Bertil Gylling, who will be remaining on the board. Bengt Hagander will be taking over as managing director and head of the group. Pär M Ericson will remain as deputy managing director and in Optima Batteries Inc. as managing director and CEO. New products A new battery size was launched in autumn, a somewhat smaller Red Top battery, which will reach new markets and consumers during the year 2000. An advanced charger programme has now been introduced by Optima. Furthermore, Optima is now launching a battery and charger pack, Spiralpack . This technology platform offers overall solutions for electrically driven applications in demanding environments. Research and development The cooperation with Volvo Technology Transfer AB in the jointly owned EFF Power AB has progressed well. The functioning of the key components has been guaranteed and the technology has been verified at the component level. The intention is that the project will be commercialized within 3 years. The project is of particular interest since it gives Optima access in the future, to more product areas and markets. Optima is currently participating in 2 projects with Europe's leading car manufacturers. One is based on exhaust emission controls for the American market by means of catalytic heating. The other one is based on the industry's choice of the 36- volt battery as a future standard. In both projects Optima's SpiralCell battery technology holds a prominent position with a projected launch onto the market in 2002/2003. The charging and cycling project at the Advanced Lead Acid Battery Consortium (ALABC) in the US has confirmed a double cycling length for Optima's deep- cycling battery technology. The aim is for the cycling length of Optima's batteries to be quadrupled. Production A Swedish production manager, Börje Maleus, formerly of ABB, was appointed during the year. His wide experience with complex production systems has quickly had beneficial impact. Earnings The group reports a before-tax profit for 1999 of 7.0 MSEK (-28.9). Sales amounted to 324.5 MSEK (278.7). Of the sales figure for 1998, 6.1 MSEK can be attributed to the GM project. Financial position and investments The group's cash holdings were 6.1 MSEK (12.8). Unutilised bank overdraft credits were 26.0 MSEK (13.8). The group's investments amounted to 16.1 MSEK (21.1), 11.8 MSEK of which relates to financial leasing. The parent company The activity here consists only of group management functions. The income is mainly constituted by royalty revenue from the American subsidiary amounting to 9.0 MSEK. Future prospects During 1999 Optima passed the break-even point at the same time that considerable future increases in volumes were assured. The development of several important battery projects is going according to plan and will come to be of great significance for Optima's future expansion. The board believes that sales and profits will develop well during the year 2000. Proposal for the annual general meeting The board of directors will propose to the meeting that no dividend be declared for the financial year 1999. Danderyd, Thursday 24th February 2000 The Board of Directors of Gylling Optima Batteries AB (a publicly held corporation) Information opportunities, 2000 The ordinary general meeting is to be held on 18th May 2000, at 16.00 hrs, Vendevägen 90, Danderyd. The annual financial report will be available from week 17 at the company's office and will be sent to shareholders. The quarterly report, 3 months, will be released on Thursday, 4th May The half-yearly report will be released on Thursday, 24th August The quarterly report, 9 months, will be released on Thursday, 23rd November The balance-sheet report for 1999 will be released on Thursday, 22nd February 2001 Questions relating to this report will be answered by deputy managing director Pär M Ericson and company counsel Lars Burström. This report has not been audited by the company's auditors. GYLLING OPTIMA BATTERIES AB, P.O. BOX 742, 182 17 DANDERYD TELEPHONE 08-6223200, FAX 08-6223292, HTTP:/WWW.OPTIMABATTERIES.SE CONSOLIDATED INCOME 1-1- 1-1-1998 STATEMENT 1999 SEK thousands 31-12- 31-12- 1999 1998 Net sales 324,462278,705 Cost of goods sold - -217,353 226,678 Gross income 97,784 61,352 Sales and marketing -41,946-42,948 expenses Administrative expenses - - 38,649 39,147 Operating income/loss 16,691 -20,245 Net income/loss -9,648 -8,687 Income after financial net7,043 -28,932 Tax 710 -20 Profit/loss for the period7,753 -28,952 CONSOLIDATED BALANCE SHEET SEK thousands 31-12- 31-12- 1999 1998 Fixed assets 150,702104,657 Other current assets 35,680 33,733 Inventories 43,950 54,116 Accounts receivable 60,454 47,138 Cash and cash equivalents 6,114 12,801 Total assets 296,900252,445 Equity 98,170 88,489 Interest-bearing 151 789116 666 liabilities Accounts payable 28,094 28,120 Other non-interest-bearing18,847 19,170 liabilities Total equity and 296,900252,445 liabilities BUSINESS RATIOS 31-12- 31-12- 1999 1998 Gross margin (%) 30.14% 22.01% Operating margin (%) 5.14% -7.26% Profit margin (%) 2.17% -10.38% Return on equity (%) 8.31% -33.64% Return on capital employed10.70% -8.07% (%) Equity ratio (%) 33.07% 35.05% Debt ratio (multiple) 1.55 1.32 Percentage of risk-bearing32.76% 35.05% capital (%) Interest coverage ratio 1.41 -1.18 (multiple) Number of batteries sold 508,000444,000 PER SHARE DATA 1999 1998 Number of shares 29,915,29,915,4 400 00 Earnings per share after 0.26 -1.06 tax P/E ratio (multiple) 52 neg Equity SEK 3.28 2.95 COMPANY CASH FLOW ANALYSIS1-1- 1-1-1998 1999 SEK thousands 31-12- 31-12- 1999 1998 ÖPERATING ACTIVITIES Operating income/loss 7,296 -28,932 after financial items Adjustments for items not 4,517 7,840 affecting cash flow Changes in working capital- - 8,938 43,197 Cash flow from operating - -30,030 activities 31,384 Cash flow from investment - 7,114-720 activities Cash flow from financing 31,810 40,726 activities Cash flow for the period - 6,6889,976 Cash at the start of the 12,802 2,826 year Cash at the end of the 6,114 12,802 period ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/08/31/20000831BIT00940/bit0001.doc http://www.bit.se/bitonline/2000/08/31/20000831BIT00940/bit0002.pdf

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